Personal Wealth Vs Happiness

Image: Christoph Niemann

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If you went out into the street and asked people at random how happy they were, what do you think you would find? That the healthy are happier than the sick? True, although not by as much as you might think. Young people are happier than the middle-aged and the old? False—happiness is remarkably stable over the life cycle. Religious people are happier than nonbelievers? True, at least according to researchers in happiness economics, a rapidly growing field that relies on opinion surveys rather than on government statistics to measure well-being and trace its causes.

In April, at the Brookings Institution in Washington, two enterprising young economists from Wharton, Betsey Stevenson and Justin Wolfers, addressed the age-old question of what money can and can’t buy. Drawing on a wide variety of surveys, the duo claimed that rich people are happier than poor people, rich countries are happier than poor countries, and as countries get richer they get happier. Within weeks, newspapers around the world had picked up on the findings, and Wolfers was appearing on CNBC to brief viewers.

Why all the fuss? Stevenson and Wolfers’ paper runs counter to a large body of evidence suggesting that, especially in rich countries, economic growth has failed to translate into greater subjective well-being. In the United States, the first happiness surveys were carried out at the end of World War II. Sixty years later, despite the fact that people’s inflation-adjusted incomes have quadrupled, reported happiness levels have hardly budged.

The U.S. isn’t alone. “In China, between 1990 and 2004, per capita income went from 5 percent of the U.S. level to 16 percent,” says Richard Easterlin, an economist at the University of Southern California and one of the founders of the happiness school. But happiness over that period stagnated. “Life satisfaction, if anything, seems to be declining. India, Chile, Turkey, Ireland—all of them show little or no improvement in happiness or well-­being despite rapid economic growth.’’

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